Cryptocurrency in India - Are the Central Bank (RBI) and the Finance Ministry on the same page?

Cryptocurrencies, by their general makeup, are wont to keep the investors and the companies dealing in them on tenterhooks. 

In India, their situation is made worse because of the conflicting signals emanating from two government bodies. The Reserve Bank of India, the country's autonomous central bank that decides on monetary policy and currency issues appears to be at variance with the Finance Ministry that is in charge of macroeconomic policies, stock markets and public financing.

Yesterday, a Reuters report, quoting a top government official, said India is proposing a law banning cryptocurrencies, fining anyone trading in the country or even holding such digital assets.

"The bill, one of the world’s strictest policies against cryptocurrencies, would criminalise possession, issuance, mining, trading and transferring crypto-assets," the report added.

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Indian FM's views

As it happens, the report doesn't square with what the country's Finance Minister Nirmala Sitharaman said over the last weekend. She had said India is not shutting off all options when it comes to cryptocurrency or blockchain and fintech.

"A Cabinet note is being prepared. It's almost nearing completion and then it will be taken to the Cabinet. We will allow a certain amount of window for people to experiment on blockchain and bitcoin," she was quoted as saying.

On blockchain technology, she said it is a big area and India has a lead advantage in it. “A lot of fintech companies have made a lot of progress on it. We have got several presentations. Much work at the state level is happening. And, we want to take it in a big way in IFSC or Gift City in Gandhinagar,” Nirmala Sitharaman said.

New Bill may be no different from previous draft

With the country's chief financial officer saying one thing and the news from the country's central bank being something else, the cryptocurrency dealers and other stakeholders are clearly confused.

As it is, India's cryptocurrency market is in a state of limbo. Last year, the Supreme Court had struck down the RBI’s instructions in 2018 to banks to stop providing services to crypto trading platforms, leading to uncertainty about the status of virtual currencies in India.

The new Bill that the Reuters report speaks of is expected to be no different from the draft bill that recommended total banning of cryptocurrencies. In which case, the dealers and investors should have no great expectations. But the Finance Minister seems to have an open mind on the issue.

The new legislation, when it is officially out, will clear the confusion one way or the other.

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